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**CFA Practice Question**

The following dataset shows the change of a consumption basket over time:

2011 (price/quantity)- Bread: $0.80/52; Milk: $1.24/28

2010 (price/quantity)- Bread: $0.77/50; Milk: $1.22/30

2011 (price/quantity)- Bread: $0.80/52; Milk: $1.24/28

The denominator of the Paasche index should be calculated as ______.

A. $0.77 x 50 + 1.22 x 30

B. $0.80 x 52 + 1.24 x 28

C. $0.77 x 52 + 1.22 x 28

**Explanation:**A is the denominator of the Laspeyres index and B is the numerator of both.

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**User Contributed Comments**
1

User |
Comment |
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bruffel |
We don't actually need to know how to calculate price indices, only how to construct them... |